Higher Fuel Costs Hit Home

Motorists, Fliers Trim Travel Plans

February 18, 2000|By John Schmeltzer, Tribune Staff Writer.

Rapidly escalating oil prices could be slamming the door on travel plans for an increasing number of consumers.

The percentage of seats being filled appears to be dropping sharply as the nation's airlines cope with jet fuel costs that are running 30 percent higher than the prices forecast less than two months ago.

Meantime, higher prices at the pump are discouraging leisure travel for motorists in the Midwest and elsewhere, travel experts say.

The airlines reported the number of seats filled during January fell more than 3 percent as travelers reacted to a $20 round-trip fuel-price surcharge. That trend appears to be continuing into February, according to the carriers.

"We have seen a softer demand in travel then we anticipated," said Jim Goodwin, chairman and chief executive of Elk Grove Township-based United Airlines.

Goodwin said fuel prices, the second-largest expense for the world's largest airline, are rising faster than the carrier thought possible when it prepared its estimates less than a month ago.

"We paid 72.6 cents per gallon for jet fuel, compared to the 71 cents we thought we would pay for the entire year," he said.

The airline now anticipates it will spend $540 million during the first quarter on fuel, rather than the $500 million it estimated in January. The airline spent $396 million on fuel during the same period in 1999, United officials said.

American Airlines, the nation's largest domestic carrier, said it is paying 30 percent more now than what it estimated it would pay for the entire year.

While the airlines are covering some of their increasing fuel costs with the ticket surcharge, Goodwin said, "We don't know yet what the demand ramifications will be due to the surcharge. This is going to be a tough year for the industry."

In addition to the fuel problems, he said: "There are still sluggish parts of the world. There is still excess capacity in the Atlantic and the Pacific. Japan, in particular, is soft."

As for domestic travel, even those who seek to save money by driving instead of flying could be in for a shock.

While higher prices won't necessarily cause consumers to change their plans for big vacations, it could discourage some weekend jaunts, according to Norma Cooper, administrative manager for the Chicago Motor Club.

Gasoline prices of $1.60 per gallon could add as much as $25 to the cost of gasoline needed to fuel a car for a weekend trip, she said.